Second charges becoming home improvement loans

Second charge mortgages are more commonly being used for home improvements and less for debt consolidation, research from specialist master broker V Loans shows.

Between January and August one in three (33%) second charges were used for home improvements, twice as many as a year ago, while 75% of customers used second charge for debt consolidation in 2014 compared to 36% in 2016.

Marie Grundy, managing director of V Loans, said: “The switch from debt consolidation to home improvement has been dramatic over the past two years and our own loan book demonstrates how the market is changing.
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“It is particularly interesting to see the change in views among brokers about borrowers who can benefit from a second charge such as customers who do not want to lose fixed or tracker deals by remortgaging as well as interest only customers and people facing early redemption charges.

“The MCD has speeded up the process by removing cooling off periods and because a solicitor is not required for most second charge transactions this not only helps with the speed of transactions but reduces costs.”